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Small business groups have welcomed the Competition Commission’s recommendation to Lord Mandelson for a grocery ombudsman to regulate supply chain practices.

The Commission said there was evidence that, if left unchecked, supermarkets would harm shoppers by squeezing suppliers so much that they would cut investment in new lines and products.

Clive Davenport, trade and industry chairman at the Federation of Small Businesses, says: ‘We welcome the Competition Commission's call for an independent ombudsman for the grocery market which can give small suppliers that are suffering at the hands of the supermarket giants a recourse to justice.’

James Lowman, chief executive of the Association of Convenience Stores, says the move would be an ‘affordable and necessary response’ to benefit consumers.

But the British Retail Consortium (BRC) called for Lord Madelson to reject the recommendation. Andrew Opie, BRC food director, says: ‘The last thing needed at any time, let alone in a recession, is a multimillion pound bureaucracy – unnecessarily piling on costs and pushing up shop prices.’

Earlier this year Duncan Swift, head of the food and agribusiness recovery group at Grant Thornton, told SmallBusiness.co.uk that supermarkets keep their prices low at the expense of suppliers.

‘I have seen a number of small businesses affected by unreasonable buyer behaviour on the part of the supermarkets. They often demand that contract terms be changed retrospectively and will cancel suppliers at short notice, or delist their items without warning. In some cases, these factors are a direct cause of business failures.’

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